Merely Uploading Notice On Portal Without Mobile Alert Vitiates Tax Reassessment: Calcutta High Court

The Calcutta High Court on 20 January held that merely uploading income tax notices on the portal, without issuing a real-time alert to the taxpayer's registered mobile number, is insufficient to sustain reassessment proceedings under the Income Tax Act, as it violates the principles of natural justice.

A Single Judge Bench of Justice Om Narayan Rai set aside the reassessment proceedings against Basu Tea Pvt. Ltd., the taxpayer and legally unsustainable. The Bench held that the it had been deprived of a meaningful opportunity of being heard.

The dispute arose from reassessment proceedings initiated against the taxpayer through a show-cause notice under Section 148A(b) of the Income Tax Act, alleging escapement of income for the assessment year 2017–18. Section 148A(b) mandates a preliminary inquiry process before an Assessing Officer (AO) can issue a notice under Section 148 to reopen completed assessments.

According to the taxpayer, the department merely uploaded the show-cause notice and subsequent order on the income tax portal and sent communications to an email ID that had already been changed and was no longer in use.

As no reply was filed to the show-cause notice, the AO passed an order under Section 148A(d) and simultaneously issued a notice under Section 148, reopening the assessment for income escaping assessment.

Aggrieved, the taxpayer approached the High Court contending that the entire reassessment proceedings were vitiated due to non-service of notices, as he had no knowledge of the proceedings and was denied an opportunity to respond.

The revenue relied on Rule 127 of the Income Tax Rules, 1962, and a CBDT notification dated September 12, 2019, to argue that uploading notices on the portal constitutes a valid mode of service and that the taxpayer was required to remain vigilant.

The Court observed that while portal-based service is a recognised mode under the statutory framework, such service cannot be treated as complete by mere uploading. It observed:

“The further action following uploading of the notice is that a real time alert should also be sent to the assessee's mobile. As to whether such alert was sent in the present case or not has not been made known to the Court,” 

In these circumstances, the Court held that there was serious doubt as to whether proper service had been effected and concluded that the reassessment proceedings were completed in violation of the principles of natural justice.

Accordingly, the Court set aside the order passed under Section 148A(d) and the consequential notice issued under Section 148.

For Petitioner: Himangshu Kumar Ray, Sushant Bagaria, Subhasis Podder, Gourav Chakraborty

For Respondent: Soumen Bhattacharya, Madhu Jana